November 28, 2011
LISTING OF THE ECONOMIC INTEREST SECTOR COMPANIES ON THE NIGERIAN BOURSE: A PRESS CONFERENCE OF THE CAPITAL MARKETS COMMITTEE 28TH NOVEMBER, 2011
Gentlemen of the press,
It gives me great pleasure this morning to address you on this all important issue of listing of key players in the Nigerian economy. This address is in response to already growing public interest discussions on indigenous growth inclusive measures under consideration for the Nigerian economy.
Let me again state here the obvious, the market in Nigeria is in a state none of us can be proud of. The All-share index that rose to 57,990.22 points by December 31 2007 with market capitalization of N13.29 trillion with over 300 listed securities on the exchange has by 2011 witnessed a 56 per cent decline to 20,202.50 points and a market capitalization value of N6.44 trillion.
This Committee wishes to note here that amongst the causes of the downward trend and eventual collapse of the market was the fact that our nation’s Stock exchange was and still is relatively small and unrepresentative of the size of the nation’s economy, underdeveloped, illiquid and operated in isolation from other markets. This is unsustainable and must change to engender development of the Nigerian economy.
It is in the light of all these that this committee has set out to partner all stakeholders and market operators to engender growth and diversification of the market so that it can be more reflective of our nation’s economy.
This House needs to lead the fray, and we will, in ensuring that growth is engendered via the capital market. Thus it is incumbent on us to pass legislative reforms that would encourage designated sectors to list on the bourse of the Nigerian Stock exchange. This will be through formal and contractual requirements to do so, supported by incentives, unbundling of stringent eligibility requirements that create high barriers for potential entrants and hinder participation by willing businesses, and adoption of options that promote foreign investment in our economy under terms that support our national interests.
This measure will rapidly grow our economy by ensuring that a substantial amount of wealth is generated in Nigeria, stays in Nigeria. It will also grow the market and rapidly encourage the ordinary Nigerian investor to get into the market again. Most importantly, it will greatly reduce and eventually eradicate corruption.
The Nigerian stock exchange on its part needs to speed up its evolution process and become more like its counterparts in other economies in the world by adjusting its business and economic models from being only a source of raising capital for listed firms to one that creates economic linkages in the resident country thus becoming a vehicle for infrastructural development, job creation and economic benchmarking through its internationally benchmarked market segments.
This committee will thus set out to do the following;
1. Get Telecoms operators in Nigeria Listed on the bourse of the Nigerian Stock Exchange. This sector, with a starting market of less than a Million in 2000, now caters for over 90 million users. These telecommunications companies make huge profits from Nigeria and are mostly not listed on our market.
MTN for instance, got a licence in 2001 for the sum of 285 Million USD mostly financed by Nigerian banks. Between January and June of the same year, MTN repatriated some 5 billion
USD as profits from their Nigerian operations. It is not in doubt that the MTN Nigeria which is listed on the Johannesburg stock exchange under the Industrial- non clinical services- Telecommunications sector is the largest contributor to the bourse with MTN group as the largest player in the sector. The Nigerian group accounts for 25% of the headline revenue of the MTN group listed on the bourse. The story is not much different with the other telecoms operators in the country.
Preliminary extrapolated figures indicate that the telecoms (MTN, Airtel, Glo and Etisalat) in terms of Market capitalisation could account for an average of N 6.76 TRILLION. (MTN-2.4 Trillion, Airtel-N1.55 Trillion, Glo-N 1.70 Trillion and Etisalat-N1.1 Trillion) by Q2 2012, a figure far higher than the current Market capitalisation of 6.38 trillion as at November 22, 2011.
2. Get the energy sector and its players listed on the bourse of the Nigerian stock exchange. This Committee will partner with relevant stakeholders to speed up passage of the Petroleum industries bill to foster subsequent listing of major upstream players, the NNPC and all other operators in the oil and Gas sector. This will imply ownership of these companies by Nigerians and subsequently diminish the secrecy and massive fraud that is associated with the Oil and gas sector in Nigeria.
We will also legislate to get power generation and distribution companies listed once the process of their privatisation is completed.
What needs to be done in Nigeria is very clear to us and the general consensus is that the reforms we have planned, will address the development gaps as observed. We will engage widely with all stakeholders to get the best inputs into this proposed legislation.
The House Committee is pleased with the positive comments, support and encouragement so far expressed by captains of industry, the CBN Governor, Media houses and market operators who have provided us with sound ideas that encourage us that a Bill can be placed on the floor of the House for consideration and passage by 2012.
This is a generational responsibility that must be met and this intervention by the House would once more signpost its resolve to rise up to the developmental challenges we are confined with.
Thank you, Gentlemen.